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Do Cheap U.S. Corn Exports Impoverish Mexico's Farmers?


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Old 07-06-2009, 02:35 AM
culture culture is offline
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Default Do Cheap U.S. Corn Exports Impoverish Mexico's Farmers?

Hey I was wondering if anyone could please help me with these Aplia questions:The article states that "the price of Mexican corn has fallen more than 70 percent since NAFTA took effect, severely reducing the incomes of the 15 million Mexicans who depend on corn for their livelihood." Assume that the price decrease is due entirely to an increase in supply, and that the demand curve did not shift. The supply of corn in Mexico from domestic production and imports has increased about 30% since NAFTA took effect. Using the information above, estimate the price elasticity of demand for corn in Mexico. A. 3.33 B. 0.30 C. 1.75 D. 0.43In order for the increase in supply to decrease the incomes of Mexico's corn farmers, the price elasticity of demand must be: A. Relatively elastic B. Perfectly elastic C. Relatively inelasticI think it is relatively inelastic & 0.43, but I'm not sure!
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Old 07-06-2009, 02:35 AM
Hyundai Hyundai is offline
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Default Do Cheap U.S. Corn Exports Impoverish Mexico's Farmers?

D. 0.43 = 30% / 70%I think both A & C will work in the second one. But 0.43 is inelastic.FYI, price of corn went up in recent years since it is used to make ethanol, so Mexican farmers are back in business.
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